Amen to that!

A lot of bloggers have seen the evil of these types of sites. It's just taking advantage of stupid people.

The BBB isn't a government regulatory agency. It's a private organization.

I never understood anyway why web auctions end at fixed time, unlike offline auctions which end when there is no higher bid. The bidbutler problem goes away if the auction ends after time X IF no new bids were placed for Y minutes. Or something like that. Of course it wouldn't be so profitable; it would just make more sense.

This is quite a timely post, as just this past week I thought I would take Swoopo for a spin to see what I thought.

I would agree whole-heartily with your post, except for the part about the bidbutler--Having used the bidbutler, I would have to disagree with the statement "exploitatively expensive." It does not cost anything extra, nor does it put any exploitive conditions on how you use it. (except of course with the already-mentioned manual bid delay fluke)

As for people being taken advantage of, I have seen a number of auctions where people have paid >$1500 for a $1200 macbook, because of the way they are bidding/the way it is setup.

It truly is a racket.

The first red flag for me comes up with any auction service that requires me to lose money and not get any return from the item. That's a gamble on its own, since no real auction site would force me to lose money just for trying.

Swoopo is more than just a scam, it's an insult to the internet in general. I'll definitely be telling friends and family about this.

Gambling can be fun if you know what you're in for, and you don't expect to win. It's about playing the game. I know for one that my parents could find a site like this, think it's a great way to make a bargain, and lose incredible amounts of money and not understanding WHY they just seem to keep missing a bid.

Fight the good fight Jeff!

Man, this is one of the oldest tricks. Here (Spain) on every fair, you can find several Gypsy stands that use this auction method, and I believe this has been this way for the last thirty years. They auction everything, people buy auction tickets, and loose. Scams 2.0 baby!

Why do you care, man? No one's a kid here, if someone wants to go and spend their money on that website they're going to do it regardlessly even if it were classified as a gambling website. Other than hurting their business itself you aren't going to achieve anything or convince anyone. So why bother with this? There are better ways to use your energy.

Unless of course, you have a personal beef with that site, which you do seem to have.

Oriented strand board is evil?

While I agree that it probably is gambling, I just have to say, who cares. Why do we need the government stepping in? As long as there are only adults bidding on the items, it's their own choice what they spend their money on.

Worth taking another swing at these sites.

So, besides, Swoopo, any other sites you would go on record against?

Vigilante justice! Hack everything!

The Swoopo business model is underhanded verging on dishonest. I doubt the average Swoopo user has any idea that he's stuffing money into what is essentially an online slot machine.

Regulatory agencies should spend a little less time harassing legitimate games of skill such as online poker, and a little more time harassing sites that offer what amounts to a Mafia-style numbers game, thinly disguised.

is it really that much of a scam? I see it as nothing worse then a Chinese auction (some call it tricky tray). You pay a fee to get n number of tickets, and can buy more if you want. Then you walk around putting as many tickets as you want, into cups in front of merchandise. In the end they pull random tickets from the cups to see who won. You can easily spend money and get nothing in return. I'm not trying to say that I approve of Swoopo, but a fool and his money is soon parted...

@NJ Brad:

The difference between what you're describing and Swoopo, is that after the winner is picked (from people paying for that privilege, which can have no end if people keep on bidding) the winner has to still pay for the marked price of the item! Sure, it could be only 35% retail price, but each 15 cents of that cost someone 75 cents, so in effect they make 5x of the final bid cost, just from running the auction, 6x if the person buys the item!

Just let this sink in...Swoopo doesn't even need to have the item in stock. As long as it sells for more than 1/6th its retail price they can just buy the item from amazon, ship it to you, and make a profit.

And there is a huge opportunity for just plain fraud. What if they just had an insider automatically win every auction? No downside whatsoever, just pure profit from nothing.

It's a scam of the highest order and probably a moneyprinting scheme for the owners.

It is a scam, reason being that the collective cash of all the unsuccessful 'bidders' far and away exceeds the value of the items being sold. It's more akin to pyramid schemes, where one small group gets unjustifyingly rich at the expense of a large number of other groups.

There is no way you can call this any kind of auction. It's gambling through and through and it should be labelled as such and policed as such. You shouldn't have to buy bids in an auction any more than you should be able to buy votes in an election. They're about as corrupt as each other. Can someone explain how 10 people can bid on a $20 item, 9 people bid $10 and 1 person wins the auction by bidding $11. The owner of the item gives away $20 and recieves $101. Have I got that right? If so it comes under the 'freedom to print money' title.

I think you missed a very important point in a Swoopo auction. "If a bid gets placed in the final moments, we extend the auction by up to 20 seconds".

This does skew your analysis.

Your statement "...your client-side bid ... ending up at the top of a queue with dozens or hundreds of other bids placed within a fraction of a second of each other." especially neglects this point.

A client-side bid will win if it managed to be the only request within the subsequent (upto) 20 secs.

Otherwise, great article as usual.

Thanks for the post. I clicked through an ad to the swoopo site just the other day. I reached the same conclusion that it was a scam. Here's a thought for others out there. Every time you see an add for the swoopo site, go ahead and click it. I assume a lot of the ad revenue they pay is based on click throughs. We can cause their ad revenue to go through the roof! Just don't bid on anything!!!

> While I agree that it probably is gambling, I just have to say, who cares. Why do we need the government stepping in?

For the same reason those payday loan joints need to be regulated:

http://en.wikipedia.org/wiki/Payday_loan

capitalism gone wild: 3,685% interest rates. Sort of like the 3,685% house profit that swoopo rakes in.

http://www.civitas.org.uk/blog/2004/10/should_gambling_be_regulated.html
--
Gambling corporations have become adept at exploiting such human inclinations to the point of addiction, encouraging people to part with money they and their families often can’t afford to lose. It is a legitimate use of law to regulate organisations who exploit the weakness of other people for monetary gain. Banning gambling altogether would be going too far, but putting limits on the number of outlets and the size of the winnings is sensible, given human nature as we know it.
--

Just look at how many honest programmers there are.

If I was into Evil, I'd definately build a site like this. All that money for nothing!

Must fight the urge....

;)

People are too stupid to use their money wisely.

Therefore, allowing people to use their money is evil.

Jeff, I don't believe in no win scenarios. But the sheer amount of effort required to tilt the scale to our favor here...seems staggering.

G: no, you misunderstood how it works. The 9 people who didn't win don't have to pay $10. They "only" pay a few cents to make the bid.

Hmm... i thought this looked familiar... running out of content, Jeff?
http://www.codinghorror.com/blog/archives/001196.html?KeepThis=true&TB_iframe=true&height=460&width=800

Alex, that was the very first thing he linked....

Hypothetical - Runner A and Runner B agree to run a 100 yard dash. Each runner puts down $25 and then runs the race. The winner, Runner B (because he is faster), gets the $50 prize. Both understood the game before they played and only Runner B was the winner. Just because you understand how the game works before you play, doesn't mean you are entitled to win. Sounds like Swoopo - the rules are published clearly on the Swoopo website so that all players can understand how it is played before the outset and you may win if you are skillful. But just because you understand the game, doesn't mean you will win. It sounds like Jeff thinks everyone should win in a game where there can only be one winner.

Alex mate, the whole reason he posted this was because one of Swoopo's investors was responding to him re. that post.

did you actually read it?

@game of skill: That's not quite the same thing... in your race, it's a zero-sum game. All money collected goes to the winner. In swoopo, the house has a massive rake. That's the real issue... it's not that everyone should be a winner, as you suggest. It's really that in swoopo, everyone is in fact a loser.

@chris f - You are right. Yes Swoopo makes money. That's their business. Swoopo makes money for organizing the game. I assume you don't have a problem with eBay making money for organizing their auctions too. Swoopo's business looks very clear and straightforward. You say "everyone is in fact a loser" but that is not accurate because someone wins every auction. Yes, Swoopo makes money and, yes, there are losers. But there is a winner in each and every auction. If a game is too easy to win, it is not fun and every game is not for everyone. But calling it "evil" because you can't win is where I have issue.

Swoopo's evil can be proved by contradiction.

First, we make an assumption that it is not evil - meaning that it is a regular auction site where you have to pay only if you win an auction. With real auction sites, you don't have to "pay to play"; you place bids and if you win, then you have to pay the bidding price and maybe even the premium, all of which is clearly stated in "terms and conditions".

With swoopo, you have to pay before you even play. Therefore, swoopo is not an auction site. QED.

If you have pay to play, you are entering a game in which odds are not in your favor, not by default anyway. Auctions are not games based on odds (other than odds of being present at an auction).

Another giveaway is the name: "swoopo". C'mon. If someone called swoopo is selling you tokens to play its "auctions", what are the chances...

@security horror - good point. However, there are many types of "auctions" and one is called "all-pay auction" which is what Swoopo appears to be. Just because it is not the same as other types of non-pay auctions, doesn't mean it is not a "real auction." Here is the Wikipedia link http://en.wikipedia.org/wiki/All-pay_auction

Having to "pay before you even play" does not mean that "Swoopo is not an auction site."

I think this is interesting and new. I haven't won at Swoopo but I do find it amazing that people are so riled up about something just because it is different than what they are used to.

@game of skill -- oh, I don't think swoopo should be illegal, but I think you're oversimplifying the definition of "winner" here. While it's possible that some items do get won at bargain-basement prices with few bids, those aren't going to be the desirable, high-profile items. The fact is that on average, a person willing to do what it takes to "win" an auction is going to pay more than he would have at another source for the same item. In that case, he's not really a winner at all.

But I personally think the site should be completely legal, since they're up-front about their fees and methods. I still think it's evil, but not all evil should be illegal. Mostly I'm just jealous that I'm not smart enough to have thought of a good gimmick like this.

"If a bid gets placed in the final moments, we extend the auction by up to 20 seconds".

And who do you think THAT benefits? Hey! Let's extend the auction, take more bids, AND get more money for the item! Sheesh!

@game of skill -- I think you missed the truly relevant wikipedia link: http://en.wikipedia.org/wiki/Bidding_fee_scheme

i would like bring out another point over here,
Suppose let all the users bidding on Swoopo are real persons then its okay, but what if the swoopo is automated such a way that it has some virtual bidders who place the bid(just to make sure swoopo doesn't get any loss), to make sure the end user is bidding until the swoopo gets something, then it would be more evil i guess.

i dont think its really hard to implement some virtual bidders in swoopo site :)

"And if you feel as strongly as I do about this, please write your congressmen/women and urge them to regulate these exploitative penny auctions."

I've got a better idea. People need to let people learn a few lessons. Regulation will always, always, run behind any kind of scam, and it's childish to sort of 'run to teacher' and expect people to learn anything.

We're already probably past the point of no return on people needing the state to change their diapers, but your advice does no short-term or long-term good. It makes you feel good about yourself, period. If you think there's going to be some laser-precise legislation that deals with Swoopo and doesn't impinge on legitimate activity, you're just naive.

I'm not exactly sure what amount you think is a proper amount of law and code that needs to be produced in order for life to be 'just'. But I guarantee, as with code, when the complexity increases so do the errors-- and the errors often fall on people like me who couldn't care less about either Puritanical views on gambling, or spending my time shepherding fools through life.

I've never understood the people behind sites like this, why not just go rob a bank or something. Who cares if it's "legal" or not, it's equally evil.

Adults smoke. That's bad and should be made illegal.
Adults drink alcohol. That's bad and should be made illegal.
Adults have sex. That's bad and should be made illegal.Yeah that's bad because we have orphanages and this means that sex -> children -> orphanages.
Adults gamble. Wow, that's real bad. 10 whips per gambled dollar.
... what else ...
Adults go on Internet. Obviously to watch porn, what else? Cut off these stinky ADSL. Modems still allowed.

There are more but I need to find a whip (I gambled 25 cents last time I was in Las Vegas) and a pair of cissors.

Ah - sado-maso stuff is not allowed either. So no whip nor cissors.

As others have noted, the keyword here is ADULTS. The IQ may vary.

> If a bid gets placed in the final moments, we extend the auction by up to 20 seconds
- as any programmer ought to know this only postpones the race condition by 20 seconds. The same situation may arise then

@game of skill:
> But just because you understand the game, doesn't mean you will win
- that is sort of the point about it being a gamble. The other point is that the total money paid by players will most likely exceed the cost of the item by orders of magnitude. Ergo: the players lose vs. the system wins.

@jeff:
So now you want to protect users of the internet against bad code snippets and evil auctions alike. _And_ you're getting into politics? Weehooo.

In holland a company offering a similar scheme was just ordered by the minister of justice to shut down on pain of a being sued because they are a gambling site (according to the minister)

the site said they werent planning to comply with this request so i'm curious if we get some kind of lawsuit about this. state vs goudkoortsveiling.nl

Jeff,

Welcome to the high finance of the 20th Century, brought down to earth:

http://www.cmegroup.com/trading/economic-events/economic-events/nonfarm-payroll_contract_specifications.html

Call your broker, you can get a contract from the CME based on the number of jobs gained or lost over the month of May.

Great posting. The best post for a long time.
I guess the real problem is not if this is a gambling system or not. The problem is some people are just unable to think for themselves and that's why they need the government to take care of it with regulations.

There's no point banning gambling, people will find ways to do it anyway. A fool and his money are easily parted, and that will always be the case. Even if you ban traditional gambling facilities doesn't the stockmarket provide the ability for gambling?

Interesting, I never saw it from that perspective and I have been in the situation of having to write an automated bidding agent for one of these sites. My employer thinks a penny auction site is a good idea but he likes to scam people left and right so it seems like a perfect fit. But most of the placed bids are not real so even if you calculate a total of $12000 for a MacBook, the auction site will make considerably less.

Every lottery has mio. of losers. Every gambling has mio of losers.

I personally never bid on auctions, also not on eBay. I use eBay as a shopping portal. There are so many shops selling items as "new" on eBay for a fixed price and I always find what I'm looking for. Bidding on auctions is too much gambling for my taste.

Here in the Netherlands we recently have had exactly the same. There's a guy who has a penny "auction" website, exactly as you describe. The government is investigation if what he is doing is legal or not, and he was on TV being asked about his website. Ofcourse he insisted that it is an auction and not gambling.

Oh, I see pvc already wrote about this.

The key point here is that it is gambling in disguise. The operators of such websites try to mislead people into thinking that it is actually an auction, while in reality it's gambling.

@Wojtek: Adults should be allowed to do "bad" things such as gambling, but that's not the point here. The point is that people are being misled, and they don't know they are gambling.

So, what's this evil thing called an OSB?

ALso what i realized is, what if some clever user learns to make DOS attacks on swoopo's server to make sure all legit bids in the last 2-3 secs timeout and his/hers bids make to the last one!
Infact, i wonder if it's already being done on the site?
It should be quite simple for a dedicated hacker to do that i'm sure, only it won't be able to prevent the butler bidder. (and that give MORE undue advantage to the butlerbidder).
I wonder if swoopo's got any DOS prevention mechanisms for DOS or DDOS.

Jeff,

Once you've gone after payday loans (after the ridiculous exercise of extrapolating to annual interest rates), you should hit the hotels next!

While it is shameful that these people can get away with this, I have to ask whatever happened to "Let the buyer beware"? I think that we as a country try to protect everyone from themselves way too often. Some people should lose their money and learn themselves a valuable lesson. We are creating a nation of imbeciles who are incapable of caring for themselves. Even if the Government decided to regulate this industry, these sites will only move their servers to another country where it is not regulated. Government action is unnecessary, we have to stop trying to slow evolution. Let people make their own mistakes.

I see a "Wargames" reference :D

I see a "Wargames" reference

Ayn Rand said 'if you protect people from their folly you fill the world with fools'

Like we need more fools.

Don't know why you don't just have done and give your website the 'hammer and sickle' branding you seem to want.

I'd like to just post this example of Swoopo's evil brilliance. I visited there this morning to check it out, and watched one of their 300 bid vouchers sell.

The ending price, for this item worth $225 (and only then $225 of savings from Swoopo, they pay nothing for this item), was $39.68. That means that people paid, to Swoopo, $2,976.

Worst of all, however, the winner was a BidButler 'winner'. They set some ridiculous ceiling, and left. Here's what Swoopo proudly displayed:

Congratulations, Wallece!
Savings: 0%
Savings:
Worth up to: $225.00
Placed bids (515): $386.25
FreeBids (38): $0.00
Final price: $39.68
Savings: $0.00

At least they had the courage to admit, openly, that this person saved nothing--quite the opposite! In attempting to get just 300 bids, they spent 553 bids--losing 253, overall. More to the point, in cash, trying to buy this $225 item...they /lost/ $200.93 on the deal.

Swoopo: Where even the winners are losers.

I hate big government, but sometime regulations are necessary. Take the current housing collapse here in the United States. The one main reason it happened is because Bill Clinton (and the Congress/Senate) remove the regulations that would have stopped Fannie/Freddie and other lenders from making all the bad loans that they did (to people who could not afford them). Now we are paying the price and have had to pay over a trillion dollars to bailout all those "fools" that we allowed to be parted with their money.

If we do not regulate these type of sites, then the way things are going we all will be paying to bail-out all these people who used these site spending money they did not have. Nowadays no one wants to take the consequence of there actions. Not regulating these sites (defining them as gambling sites, and regulated as such), will come back to bite us. Then we will be bailing out all the fools that used these kinds of sites (Because they were to stupid to know they were gambling). In the long run if that happens not only will the person who used these sites be the victim, but we all will pay for there foolish decisions.

Good article Jeff, it is good to see a non-technical article every now and then.

Meh, swoopo and its ilk will go the way of the shell games at carnivals. Eventually "everyone" will know that they're just a scam, except the few fools who think they can beat them.

And what harm. As a previous poster, said, fools and their money are easily parted. Mark my words: swoopo will be long gone before any regulation is forced upon it. I mean, if these guys are making the amount of money you say they are (and it seems they are) then I give it another 12 months, tops, before they retire and buy a tropical island.

And in fairness, as has been pointed out, they DO make it very clear what you are getting into. So there are no excuses.

If I may make on suggestion before I go; if you're going to make a crusade against systems designed to innovatively f**k people out of their hard earned money, why not take up arms against something a bit more relevant, like, oh I don't know, 90% of ERP software out there :)

Hotels doesn't really need any public display as they aren't gambling services, but just overpaid services in general.

I agree that it's a gambling site, but like others say, there is nothing inherently wrong with gambling, it's the people who run it and the people who do it that are the issue. Considering it's pretty much a closed loop system with very little affect on the average non-gambler, there isn't much of a reason to regulate.

I don't believe people have the right to be protected from themselves just as much as I don't believe you have a right not to punch yourself in the face. Of course you do, you're an idiot for it, and if the families of said people aren't smart enough to leave these addicts, then they are perpetuating the system themselves, especially (in the US) considering the HUGE amount of resources dedicated to helping said families.

So no, no regulation needed here, these guys may be scum of the earth, but nobody can reliably regulate this quite grey area of morality.

People continually feed off each other's greed and selfishness. It's a horrible planet that we don't step in to stop it, but some bright light came up with the expression "caveat emptor" and we've been stuck ever since. Maybe we should reconsider labeling this idea as being good?

Paul.

The real question I have is this:
what regulations are implied by being called gambling?
what are the benefits of those regulations?

I hope it's not 'exclusivity' which seems to be the only outward seen 'benefit' of gambling regulation.

I would really like to know...

@game of skill: So, exactly how long have you been employed by swoopo?

It's certainly gambling. Several people pay, only one receives the jackpot. It's not very different to poker: several players throw in money, folding as they declare "too rich for my blood", except that as the jackpot is fixed, the house edge at a busy table is considerably greater.

I think Swoopo IS gambling.
It causes gambling addiction because the auction doesn't have a clearly defined finish date. In ebay you can bet as long as you have time to do it, but once the finish date has been reached, that's it, you can't keep betting.
The problem is that a Swoopo user can't easily realize that she's gambling. Swoopo is not been honest on this.
So, Swoopo should be treated as a Gambling site. That way, whoever wants to get in the game will know that it's not about skills.

These applications create a negative impression toward those of us who are developing games and activities that don't promote gambling.
I am not a proponent of regulation, because it often leads to restrictions on all of us.
The best thing we can do is to spread the word and demonstrate that there are many great alternatives to gambling our money away.
Thank you for opening this discussion and raising the voice of warning.

I'm with Carra. What OSB?

From Wikipedia, the free encyclopedia

OSB may stand for:

* Order of Saint Benedict – a monastic order
* Orthodox Study Bible - an Eastern Orthodox study Bible in English, including the Septuagint
* Oregon State Bar
* Oriented Strand Board – an engineered wood product
* Old Saybrook (Amtrak station), Connecticut, United States; Amtrak station code OSB
* Oracle Secure Backup
* a defunct television station in South Korea
* Orthodox Speakers Bureau
* Oracle Service Bus - Part of the Oracle SOA Suite of technologies.
* accr. - Original Signature By

I have a guess, but some of the others would be amusing answers.

this reminds me of barnes and noble when they use brokers worldwide to deliver your stuff!!! some times it arrives sometimes it doesn't :).
are all auctions like this? how come a bid is non refundable? is there some place i can get ego points by saying "look i bid" do you get out bid by famous people? "i was out bid by bill gates man, i had no chance"

these guys should look for a way to give back to bidders. can't they charge only those bids that were successful? like my favourate B&N who charge you $29 regardless the size ofr value of what you ship express.

i love B$N and use them regularly to buy books. despite the subtle way of getting you to pay that $29 for ups, they are not bad folk. these swoopo chaps are just plain evil!! unless jeff has misrepresented here, THERE JUST IS NO UP SIDE TO SWOOPO. win or lose you are screwed

Hey! Barbra Streisand stole my orange!

OSB

I'd like to think it was Open Source Billionares,

http://www.codinghorror.com/blog/archives/000842.html

but he might mean Office Shortcut Bar.

Why this bandwagon?

Why not AIG, Federal bailouts, sleazy financial institutions, disappearing 401Ks, Federal Reserve printing presses, Senate Bill 909?

If people are addicted to gambling I feel it's their fault and their duty to reach out to help themselves. If they don't want to change they won't. Same goes for swoopo. This stupid site would die out if people would just realize it's a screw.

I have accepted that "you can't fix stupid" and if people are going to run amok throwing their money away - that's our reality. In my mind, people need to step up and start learning a lot more these days and ultimately hold themselves accountable for their actions.

Wait my variable rate went UP again? NO WAI

Darrel: re your example of the user who placed 553 to "win" 300.

The worst part of this, and the part that I think makes swoopo so brilliantly evil, is that every time the "winner" decided to bid, it was ENTIRELY RATIONAL.

By the time they've placed 300 bids on the auction, they're faced with two possibilities: either walk away and lose the 300 bids they've placed, or continue on and place *just one more* bid for a chance at winning a full 300! Every time you bid, all your previous bids are a sunk cost and can't be factored into your cost/benefit analysis.

http://en.wikipedia.org/wiki/Dollar_auction is quite relevant.

Jeff - it baffles me when people say theft and deceit are "capitalism gone wild".

The issue is one of false advertising. We already have laws against this. Just like Bernie Madoff's little scheme was discovered way before any action was taken, we need to be enforcing the laws we already have, not creating new ones. It is gambling and should be labeled as such.

We seem to always have an endless supply of suckers, that haven't learned yet. And yes, people still fall for the old shell game.

-Norm

Maximillian - "It's just taking advantage of stupid people."

I don't see the problem with this. However, this kind of scam is borderline - when you sit down at a casino table, you know you have a good chance of losing everything you sat down with (if you don't, then you have a gambling problem) - but with Swoopo it is not so obvious. I would bet that many reasonably intelligent people get caught up in this scam.

LoL, The Balrog! That's my new defacto evil comparison. (And it is, pretty evil.)

What makes Swoopo so brilliantly evil is that it *isn't* a scam. (Unless they're using shill bidders, and there's no evidence of that). They're completely upfront about how it works, and as noted above even show the total price the winners end up paying. They're counting on people being too stupid and/or greedy to realize that the odds are horrible, and apparently that's a valid assumption.

Re: how to be a skilled player and win an item:

The best way to win a dollar auction is to come out of the gate bidding a dollar. Swoopo is not quite a dollar auction (Swoopo is nicer to its bidders) but the same strategy should apply. The best strategy is to immediately bid the MSRP of the item, which makes it a certain loss for anyone else to bid against you.

I don't even know if Swoopo allows this, and I don't know if it qualifies as a "winning strategy", but it is the best you can do. (if there was a way to beat swoopo, they'd be gone by now.)

Re: most of the comments:

I like any real-life system that exposes folks to game theory. Swoopo's a good one. Is it a scam? I don't know, because no one here has defined what a "scam" is. To me, it's only a scam if you lie about something. As far as I know they haven't. Swoopo happily explains the system to you; the fact that you'll lose money is just an emergent property of the system.

Why should you care if fools and their money are parted? It isn't that regulations are protecting the fools, they are protecting you. Perhaps you haven't noticed but prior to about, oh, the middle of last year quite a few people in the U.S. got mortgages for houses they couldn't afford. When housing prices fell it caused a chain reaction throughout the economy that, it's probably fair to say, is hurting everyone in the U.S. and other people around the world. Even those responsible people who only got a mortgage they could afford are taking a hit.

If the U.S. government had regulated Credit Default Swaps, bundling of mortgages, etc. in a manner similar to the way other financing is handled, we might not be in this situation.

Swoopo is similar (though I don't expect it to destroy the world economy, or could it. . .), sure you may be smart enough to realize that it's gambling, but at least Swoopo ought to admit that its "auctions" are a form of gambling, it is not the same as EBay.

I won't even go into the disturbing lack of compassion exhibited by many posters for their fellow human beings. I would think they would be grateful that they are perfect, have never done anything stupid, and will never need help or guidance from another human being, rather than denigrating those who are less than perfect.

"The worst part of this, and the part that I think makes swoopo so brilliantly evil, is that every time the "winner" decided to bid, it was ENTIRELY RATIONAL."

"http://en.wikipedia.org/wiki/Dollar_auction is quite relevant."

I don't get how the dollar auction is rational. At the start someone bids 1 cent expecting to make a 99 cent profit. But this is only rational if you are the only bidder. A rational strategy would have to take into account that someone else was going to bid against you. Rationally you have to assume that another bidder will also be bidding upto the point it isn't profitable, so you are not going to be able to make a profit.

Of course the obvious rational strategy would be for everyone to agree that just one person bid one cent and then share the dollar - though it's then going to be more like the Prisoner's Dilema.

"The best way to win a dollar auction is to come out of the gate bidding a dollar."

Then you haven't won anything.

Exactly.

@rich, who has beautifully drawn me off topic:

"When housing prices fell it caused a chain reaction throughout the economy that, it's probably fair to say, is hurting everyone in the U.S. and other people around the world."

The only people hurt by the economic slump are people who are voluntarily participating in the economy. Yes, that's almost everyone, but that doesn't change the nature of the game: the U.S. created the economy, which is necessarily a communal endeavor between millions of people you don't know; most of us use it for its benefits -- not all of us understand the risk, which is why some of us also play Swoopo.

Humans got along fine without a credit-backed economy for quite some time, and it's still possible to do so today. So you can participate in the US economy, reap its rewards and run its risks, or you can stay out of the game and not get hurt when it goes bad. Me, I decided to own dollars but not to own any Swoopo bids, but the evaulation process was about the same in both cases.

When government steps in to regulate what consenting adults do in private, it inevitably causes more problems than it solves. E.g., consider the cost prosecuting the drug war (which has hardly stemmed the proliferation of drugs) has imposed upon tax payers.

I'm not advocating gambling or drugs. Just saying that government, when properly scoped, is concerned with promoting individual liberty. This means that government only steps in when the exercise of my 'liberty' starts to impose itself upon your rights. Anything more and even duly elected representatives of the people become tyrants more dangerous and costly than that which they set out to oppose.

Here's my concession, to the degree in which a business like Swoopo deceives a paying customer, they should be held liable for breach of contract/fraud. To the degree paying customers enter into foolish transactions with open eyes, they need to be allowed to learn from their own mistakes--otherwise they never will.

I'd like to note to the people who don't care that it's the stupid people who really get taken by these sites: Statistically, there are far more stupid people than the rest of us, and they're not adverse to lying/cheating/stealing/killing when they're too broke to buy food. This is why we need government intervention.

Trav -

You *can't* big a specific dollar amount - that's what makes this so confusing/clever/evil.

You simply "place a bid" (which costs you $0.75), the price "goes up" a fixed amount ($0.15 normally, or only $0.01 for a special "penny auction")

So people see the "bid price" stay (relatively) low, which entices them to bid, but in fact, it is costing (someone, or many someones) $5 (in bid costs) to raise the "price" of an item by only $1.00.

Oops, that was supposed to say "You *can't* BID a specific dollar amount"

The truth here is that the "auction price" is actually irrelevant, because its the *money you are spending to bid" that is so easy to lose track of, and spend more than you intend.

Offtopic : What happened to "Orange"?

I just found swoopo today, and came to pretty much the same conclusions that you did. Running the numbers on a couple of completed auctions show that the site gets anywhere from 10 to 50 times the cost of the item sold (with some friction from merchant account or paypal fees). Even wilder -- some of the 'auctions' were for bid packages!!!

Those folks are printing money. My Lions club occasionally does something very similar for small fund-raising efforts, which we refer to as a "Chinese Auction". Of course, everyone that chips in on a "Chinese Auction" knows that the primary objective is to raise money for the club, and few care about the actual item being "auctioned".

Naturally, it occurred to me that this would be a really lucrative way to sell stuff myself, and I did a bit more research. (ok, so I have an evil streak...)

So, was not really a surprise to find that there are several competitors running the same game (some with slightly different wrinkles). I also found dozens of requests on various freelance programming sites for "swoopo clone".

Clever idea, but I'm not even tempted to buy bids. It's pure gambling.
--
www.chl-tx.com

What is this OSB and why is it so evil?

And, yeah, Swoopo is pretty evil. Their auctions only have to get to a fration of the MSRP for them to cover their costs.

Anyone doing the math can see Swoopo is making a killing on stupidity, hell I wish I thought of this idea. What is worse is they are based out of the UK, which would make me more cautious of a rigged BidButler service or virtual bidders.

I don't get the evil part, but then again I don't think gambling in all of its forms is evil. I went to swoopo and there's a large 'how it works' button that I clicked on. I then read what I felt was a very clear description similar to what Jeff described. You clearly risk 75 cents for a small chance to win the opportunity to purchase an item. Sorry, but I don't think this is evil.

When I was a kid in boy scouts I sold raffle tickets. People bought them knowing they might get nothing, because that's what a raffle is. This site has essentially taken the raffle idea, and exchanged 'free prize' with 'pay the amount that you bid'.

It's certainly not a noble concept, but calling it evil seems a bit overboard.

"This site has essentially taken the raffle idea, and exchanged 'free prize' with 'pay the amount that you bid'."

Except raffles are normally done for charity, and people buy tickets as a fun way of making a donation, rather than expecting to make a profit. And you usually only buy a few tickets, not keep buying on the basis that whoever spends the most will get the prize.

It's certainly not the same as a raffle, since in swoopo you're pretty much guaranteed that bids launched early in the auction have effectively zero chance of winning. It's only when the bid price reaches some weird sort of optimum that your bid has any actual chance of winning the auction.

Damn you, letters OSB! And damn you, Order of Saint Benedict, too!

Stupid monks.

'How it works' gives no indication of the anecdotal evidence described by the article jeff linked to: that bid butler almost always wins.

But the opposing question in this... is 'gaming' the system fair?
what about those script kiddies trying to win the coveted B.O.C. on woot? is that fair?

what about sniping on ebay? is that fair?

if everyone used bid butler, then normal market conditions would prevail... ie: those too squeamish to continue drop out (hmm kinda like poker) allowing the final price to 'settle'.

meh.... looks like gambling, sounds like gambling, smells like gambling.

Jeff, I think you misunderstand how capitalism is supposed to work. Don't take our current economy as a model of capitalism... it's pretty broken at this point. As long as Swoopo (or any other service) discloses it's full terms up front, it's up to the CUSTOMER to figure out if they want to put their money in. If it's gambling, so be it. I don't like Swoopo any more than you do, but there is no need to get the government involved. Vote with your wallet: don't use the service. The same goes for payday loans; if they disclose the interest rate, it should be up to the customer to decide if they want the loan. Government regulation just discourages innovative business practices like Swoopo -- like it or not, it's an effective business.

Ryan M, you misunderstand his point. Jeff knows there's no fraud involved. He considers that "taking advantage of stupid people" is "evil", and that "evil" things must be punished with government.

Of course, it ignores the fact that the transactions are honest and voluntary and the fact that allowing government to define "evil" is the fastest way to death.

I always felt this way about sites like Priceline.com, where you 'name your own price': the site just matches your request with offers they know of (such as airlines' published rates), then gives you the cheapest one they have that is below your request, if any. So essentially you are guaranteed to overpay, by some unknown amount, every single time.

In this case there's no money loss if you don't get the price you requested - however, the commercials make it seem as though your request is actually presented to the hotel/airline/car rental place, which is misleading.

[Waaaaay OT]

Anonymous:

I don't know that I'm in favor of regulating Swoopo (as I noted earlier, there are far more blatant forms of gambling that are perfectly legal when conducted under the auspices of high finance), but the government regulates "evil" in various ways all the time. All regulation stems from a moral framework of some type.

The best example is, I think, the enhanced penalties which are universally apply to killing someone on purpose vs. killing them accidentally.

The government is imposing additional regulation in spite of the fact that the utilitarian outcomes are the same. Of course, it's recursive, because utilitarianism is itself a moral framework.

So your argument becomes an argument against all laws, everywhere; including the laws defending private property (against theft or expropriation), contract rights (civil law), currency (against counterfeiting), and laws to restrict the government actions itself. All of those laws have their moral foundation in utilitarianism.

I just checked out an auction for a TV. They say that tv recently went for $262.65.. That means 26265 bids at $.75 each.. They 'auctioned' that TV with MSRP $1,199.90 and made $19,698.75

Am I getting this right?

I'm having a hard time classifying this. Unlike others, I can't quite see how this is "gambling". Sure, the concept of only one winner might be a giveaway, but regular auctions only have one winner too.

The problem with this that makes me question whether or not it's gambling is this. In "gambling" everyone has the same odds to win. One person who makes a wager wins (even if that's the house). In this case, 99.99999% of the people who make a "wager" have 0 percent chance to win, because someone will be bidding after them. Only the person who bids last has the chance to win, and that's a 100% chance, otherwise it's a 0% chance.

It would be like a slot machine where you don't have any chance of winning unless you are the last person to pull the lever. It just isn't gambling, but i'm not sure what it is.

Think of it like this. Suppose Ebay extended their non-paying auction everytime someone bid on it in the last 10 seconds. This would be the same thing. But yet, Ebay wouldn't be making any more or less money (ok, they might make more if they're taking a percentage of the final sale price), so would that suddenly make Ebay gambling, just because they had no fixed end time for the auction?

The way I see it, the quesiton of gambling here is not about swoopo charging for bids, but rather on having an unknown end. Charging for bids just makes them make more profit.

'but the government regulates "evil" in various ways all the time.'

That makes it correct!

A few more thoughts.

It's not really a pyramid scheme either. Pyramid schemes promise everyone to be a winner, but it's not mathematically possible (even if everyone does it correctly and nobody "cheats") for that to happen.

It's not really a Ponzi scheme either, which is mathmatically similar to a pyramid scheme.

In fact, I can't seem to figure out how it's fraudulent either, unless there's colusion involved with the operators, because the rules are fully explained and anyone can understand them. Nobody is under the impression that they WILL win any given auction, unlike ponzi or pyramid schemes that guarantee payments.

I can't quite seem to figure out how to classify this, but it's definitely not gambling because in gambling, everyone has a chance to win, and with this.. that's simply not the case.

I mean, if it's gambling.. what is the wager? It should be definable, with a probability of winning (unless the wager is fixed, which would be illegal).

Poker players are fond of claiming that Poker isn't gambling, because mathmatically, if they play their hands correctly, they have 0% chance of losing over the long run. They make this conclusion based on the expected value of a hand being positive, and even if any given hand loses over the long run they will be winnners (assuming they play correctly every hand). The same is true of the house in virtually any casino game. The house has an advantage that will make them always a winner. So it's not gambling to them.

Is it really gambling then if someone has a 0% chance of winning?

It might still be winnable, if you can increase the odds just like counting cards in blackjack. The goal is not to win every hand but rather to lose as little as possible and win as often as possible by choosing your battles.

A fair number of "winners" place less than 3 bids, so it is possible (according to my statistics).

Actually the winning strategy at Swoopo is to be Swoopo.

If Swoopo uses network delay effects and probably programmed delays for "non-bidbutlers", it is FRAUD in simple words. Can network analysis of their server traffic prove this, just in case they change the source code a day before a Govt/Police inspection?
Slight of hand using network delay! Now that is going very low.

I've burnt my fingers on cent-auctions.com. The site closed dead one fine day, and never reimbursed the bucks for its unused bidding units that i'd bought!

omg I just noticed the captcha isn't ORANGE anymore.

I love all the people saying stuff like "because the rules are fully explained and anyone can understand them."

I mean even here on a coding blog (which will theoretically be followed mostly by people with above-average mathematical reasoning skills), several people have failed to understand the rules as explained by Swoopo. (G on the 25th, John on the 26th)

Also, after another reading of the "How it Works" section on Swoopo, it seems like it would be possible to come to the conclusion (before buying your first book of tickets) that the only cost to the user is the $0.75 per bid cost. Especially if you naively do the math and come to the (correct) conclusion that Swoopo is making a huge profit just from bids.

(captcha: "the unmoral" hah!)

I wonder if the Swoopo system is setup like a casino, where first time users are identified and assigned a greater percentage of winning early on to induce a positive feedback loop...

Who cares? There's a lot of stupid crap on the internet to separate a fool from his money. WTF does this have to do with coding? I'm going to LMFAO if/when they sue you for libel.

Do the math to see how much swoopo rakes in.
An auction for a wii.
75 cents to place a bid.
Bid raises the final price by 15 cents.
Say the winning bid is $100
It would take ~666 bids to get there.
Swoopo gets $500 for those bids + $100 from the winner.
Swoopo takes that $600, buys and ships a wii from amazon and makes tons of profit.

To quote Bela:

"It would take ~666 bids to get there."

And there you go. Evil personified.

NZ has GrabABid.co.nz. Just as evil. Make a bid and the price goes up each time? What kind of crap is that?

I don't think anyone would argue that Swoopo isn't making outrageous sums of money. But. And this is a big but. Is it really illegal? Is it really gambling?

I can't see by any definition of gambling, how it can be.

In any form of gambling, one places a wager. That wager is used as a percentage of the winning. For example, in a horse race. The winner wins a pro-rated ratio of the total amount of money that's bet, after various stakes have thaken their cut.

In the case of Swoopo, the money you spend on a bid is not a part of what you win. In fact, you have to pay for the item you've won afterwards. It might be argued that a portion of the bid money is paid to subsidize the items, but that's still a bit sketchy.

All the money you spend on bids goes straight into the pocket of the auction site. In that way, it's a seperation of the bid from the items "won".

This makes it very difficult to classify as "gambling". Thus, those that argue "without question, it's gambling", really haven't logically thought about what gambling really is, or they would have a few questions.

Maybe it is gambling. I just can't seem to fit it within my comprehension of what gambling is.

who cares?
dont be upset that you didnt think of it yourself

First post I've agreed with for ages! Whilst some commenters are playing the 'freedom' card I think they're doing it from the point of view that *they* wouldn't be so stupid as to get caught. That might be fine, until the scammers get cleverer than you - then you're a victim, and you WILL feel rightly aggrieved.

I enjoy gambling from time to time, and it's generally easier to do it in the UK than in the US, but I'd much prefer an outright ban on all forms of gambling to a system that allows scams such as swoopo to operate. And Jeff's not even going that far, he's just saying this site should be regulated under gambling laws, since it's patently gambling.

What is it with this whole 'freedom' right, people? It is NOT some panacea that should be chased at the cost of living in a civilised society.

@Nobody Real: From dictionary.com's definition of 'gamble':

1. to play at any game of chance for money or other stakes.

2. to stake or risk money, or anything of value, on the outcome of something involving chance: to gamble on a toss of the dice.

Yes, this means that the definition is pretty broad, and that many things you might not consider to be 'gambling', actually are. Obviously, the US govt's definition of 'gamble' might differ.

Not every horse race bet has odds determined at the time of making that bet; some determine the odds only when the race begins. Some lotteries (e.g. the UK's I believe) guarantee a fixed prize for certain results. In theory (unless there are get-out clasues, of which I'm unaware), a '3 number' win can result in greater winnings than a '6 number' win, it just never happens due to the number of players.

If you accept that definition of gambling then it follows that *everything* is gambling.

Certainty just does not exist in the real world ... its an ideal.

The point with this site is that you are not placing bids for the item ... you are placing bids for the chance to win.

what they are doing is equivalent of rake ... they should be regulated imo.

You just have to ask yourself first, am I a gambler? Do I have the resources to gamble? The site really is not forcing anyone to do it, some people want to try their luck and like all gambling it all goes down to luck.

gameover is my user name changed from misssaks on that site

i have won over 45 items in past six weeks stared with only $10 of bids and NEVER PAID FOR ANY MORE BIDS they have cash prizes i have won over $3,000 in cash alone check ended items scroll back thru 6-8 weeks u will see gameover/misssaks winning like mad all off of $10 bill ty luv check me out

Hey,
I think your readers may be interested in Penny Auction Watch. It's penny auction watchdog site. We would love your opinions and comments, we have a forum as well. Thanks!

Clearly the debate whether a penny auction is gambling or not, depends on your definition of gambling. By Dictionary.com's definition posted above, almost any financial investment you can make is gambling, since there is always unknown factors.

As far as the people above who say the odds of winning are 0%, that's really only the case if you are up against a true SCAM site that runs computer generated bidders (aka: bid bots). At Swoopo, yeah your odds are pretty damn low since they have hundreds of thousands of users and at any given time only have up a dozen or more auction items.

The "penny auction" is not a "scam" by any definition. The only time it becomes a scam is when the house bids against you, and that is straight up fraud.

As Craig said, Scam and Fraud are 2 different things. Swoopo outlines in detail exactly how to bid, exactly how much those bids are, and auction histories.

So anyone who tries to win an auction and wastes money doing so is at fault. There is no scam or swindle going on here. The users can do the math themselves about how much a penny auction site wins or loses on a given auction.

There are many other penny auction sites out there and i have tried most if not all. However, I haven't ever tried swoopo because of the sheer numbers of people on that site. The key is to finding the newer sites without many people, that isn't going to commit fraud. One site swipeitup.com gives 5 free bids for registering (many other sites do too) but they also give out 5 free bids a month. So in theory, you never have to spend a cent. Who is getting scammed in this case? I have been a user here since inception and have seen no evidence of bot using. I haven't seen any bot using on zoozle.com either but they don't give 5 free bids per month to existing users either.

This dude that started this forum http://digg.com/business_finance/Scam_Penny_Auction_Sites_Bots_Shill_Bidders_and_Theives said he won a macbook on swipeitup.com and he's like the most legit dude on there.

Swoopo is testing a buy it now option that will allow you to credit your already submitted bids to buy the product for its msrp price. This legitimizes there business model and will hopefully be coming to the U.S. soon. Currently the option is only available on its German site. http://swoopo.de

http://www.techcrunch.com/2009/06/26/unique-auction-site-swoopo-expands-to-canada-testing-buy-it-now/

Take a look at http://www.pennyauctionwatch.com they have some really useful information as well as a user forum to help expose scam penny auctions.

Swipe It Up still hasn't let me pay for my auction win and it's been a few weeks now?

Ya know, Ive been reading every comment on this post. Ive also done a fair amount of research on these penny auction sites and more specifically, what makes them tick. Ive come to some pretty nifty conclusions.

Swoopo => definite rip off. They use a ton of auto bidders to drive prices up and then they allow the auto bidders to actually win. That pretty much means that if they dont get the price they need (like a reserve amount) then they just keep extending time and jacking the price until they do and if the auction ends, they just start it over.

Unfortunately this isn't illegal as they are not bound to sell a product for less than they have to to make their money back.

Additionally, its not considered gambling because by placing bids at the right time in the right amount, it is considered legally to be a "skillful action". Swoopo and several other sites just plant ringers to make bidding way way more competitive than it should have to be.

And yes I have won a Swoopo auction for an 8G iPod for my daughter. To do so I had to buy bids (50 Pack) and stay up until 4AM. The total cost was: 10 bids @ .75 = 7.50 + cost of iPod 50 + S&H 19.00 == 76.50. So I did actually make out. Of course I then proceeded to piss away my other 40 bids trying to win other bid packs. After that I promptly closed my Swoopo account and began my research into penny auction sites.

There are however several legitimate sites that operate pay per bid auctions that run a legit deal (ie no auto bidders, limited time extensions, etc). I wont provide advertising for them here but Im sure they will emerge with time.

Hope it helps!

Slack

you aren't paying .60 per bid unless your an idiot and buy bids from the site you get vouchers. I usually get 300 bids for at max 50.00 that means I'm paying .16 per bid or less. So swoopo can drain your bank account unless you know how work the system.

First, this is gambling. Like poker, skill can improve the odds, and being willing to spend a LOT of money and time can improve the odds, but winning is never certain. You never know who you competition is, and how much money they have or their skill level. Everyone in the "auction" loses except the one winner and house. And the house often makes rules that are intentionally exploitive. When you are done gambling at a "legitimate" casino, you can cash in your chips and leave. Few if any of these "auction" sites allow you to cash in your chips. You often cannot get refunds for unused bids. There are some sites, like swipeitup.com, that are having such problems that many users are complaining about not getting won items
(see http://pennyauctionwatch.com/2009/07/swipe-it-up/).

So part of the issue is how much exploitation is a good thing? I don't know where that line is. But not getting won items, and having no chance to get a refund on unused bids seems to me to suggest that some regulation might be helpful. It seems reasonable to point out that the absence of regulation here has led to excesses that are worse than regulated gambling.

For my response, see

http://penny-auction-insider.blogspot.com/2009/07/some-people-really-dont-like-penny.html

I HAVE READ ALL OF THE RECENT (GOOD AND BAD) COMMENTS ABOUT SWOOPO AND PENNY AUCTIONS IN GENERAL. LET ME GIVE EVERYONE A POINT TO PONDER. IF ONE DAY, A COMPANY LIKE SWOOPO SAID OK! WE WILL NO LONGER LIST OUR OWN ITEMS, FROM NOW ON, ANYONE WHO WISHES TO LIST THEIR OWN ITEMS FOR SALE MAY DO SO, YOU CAN KEEP ALL OF THE PROFITS YOU MAKE USING THE SWOOPO BIDDING METHOD, ALL YOU HAVE TO DO IS PAY SWOOPO A LISTING AND FINAL VALUE FEE JUST LIKE EBAY CHARGES.

I CAN'T HELP BUT WONDER HOW MANY OF YOU WOULD SUDDENLY BE LISTING YOUR OWN ITEMS FOR SALE WITH THE HOPE OF PULLING IN THE SAME KIND OF PROFITS ON YOUR ITEM THAT YOU SAY SWOOPO IS PULLING IN ON THEIR'S?

IT FOLLOWS THEN, THAT FOR THOSE IN FAVOR OF THE SWOOPO METHOD, THEY WOULD JUMP AT THE CHANCE. IT ALSO FOLLOWS, THAT FOR THOSE WHO ARE PRESENTLY AGAINST THE SWOOPO METHOD, THEY ALSO WOULD SEE A CLEAR ROAD TO MAKE A PROFIT ON ANY ITEM THEY LIST ON SWOOPO.

METHINKS IN THE LATTER CASE, THERE WILL BE DOUBLE STANDARDS FLYING ALL OVER THE PLACE AND THE NAYSAYERS WILL SUDDENLY BE SAYING THINGS LIKE, " YOU KNOW SOMETHING, SWOOPO IS NOT SUCH A BAD DEAL AFTER ALL. LOL.

IT APPEARS TO ME THAT THE OVERALL MENTALITY IS, IF IT IS NEW AND HAS NEVER BEEN THOUGHT OF OR DONE BEFORE THEN IT HAS TO BE CROOKED, THAT TYPE OF MENTALITY IS A CLEAR DEMONSTRATION OF IDIOCY AT ITS BEST. THOSE OF YOU WHO ARE AGIANST THE PENNY AUCTION CONCEPT MAY NOT LIKE WHAT I HAVE JUST SAID, BUT IT IS NEVERTHELESS TRUE AND YOU KNOW IT.

WHOEVER IT WAS THAT ORIGINATED THE SWOOPO (PENNY AUCTION CONCEPT) MOST DEFINITELY HAS THE MILLIONAIRS MENTALITY, THOSE OF YOU WHO CRITICIZE THE CONCEPT ARE DEMONSTRATING THAT THEY ARE ECONOMIC ILLITERATES, (special emphasis on the word economic)AT LEAST UNTIL THEY WOULD BE ALLOWED TO LIST THEIR OWN ITEMS FOR SALE, THEN THEY WOULD SUDDENLY BECOME FINANCIAL WIZARDS, LOL (SARCASM INTENDED).

COME NOW YOU GUY'S, BE HONEST AND FAIR, TELL IT LIKE IT REALLY IS, YOU KNOW THAT WHAT I HAVE JUST SAID IS TRUE AND WOULD HAPPEN IN A HEART BEAT IF SWOOPO ALLOWED YOU TO LIST YOUR OWN ITEMS. WHEN YOU BAD MOUTH SWOOPO AND THE LIKE, YOU ARE OPENING YOUR MOUTHS JUST TO CHANGE FEET, IF SWOOPO GAVE EVERYONE THE OPPORTUNITY TO LIST THEIR OWN PRODUCTS FOR SALE YOU WOULD JUMP AT THE CHANCE AND NOT ONE OF THEM WOULD GIVE A RATS ASS FOR ALL OF THE LOSERS THAT THEY PRESENTLY FEEL SORRY FOR IN THEIR BLOGGS.

NOW BE NICE PEOPLE, RESPOND TO MY POST AND ADMIT THAT WHAT I HAVE SAID
IS TRUE, PUT THE SENSE OF FAIR PLAY BACK INTO YOUR LIVES AND START THINKING OF HOW YOU CAN MAKE A BUCK INSTEAD IF COMING DOWN HARD ON THOSE WHO ARE AT LEAST TRYING TO MAKE A BETTER LIFE FOR THEMSELVES.

IF ALL YOU NAYSAYERS ARE SO CONCERNED THAT THERE ARE PEOPLE OUT THERE WHO ARE EASILY INFLUENCED, THEN STOP TRYING TO BE A MOTHER THERESA BY TRYING TO INFLUENCE THEM.

IF YOU ARE STILL AGAINST IT THEN SIMPLY KEEP YOUR MOUTHS SHUT AND STAY AWAY, THEN NO HARM DONE.

I will disagree with the author of this post only on one minor point. That is: "that this type of auction is thinly veiled gambling".

It is is NOT very thinly veiled at all in my opinion, it's an outright illegal lottery.

I'm an licensed auctioneer, and I can assure you, even with an auction license, if I tried this at one of my live physical auctions at one of my live online auctions, I'd be shut down in a minute.

What crap!

Thanks for a great and informative post, it will be interesting to see what develops.

BTW, when this is shut down, those stupos who invest in Swoopos buying credits will have their money seized same as if they were in a back room poker game.

Hi,

I have read your article and thoroughly enjoyed it, however I feel my concelt overcomes most of these problems. I am setting up an auction site in which the penny auction is incorporated. However, we also have two other auction formats which are fairer, faster and less frustrating. Check out my website

www.bidyell.com

We go live next friday. If there are any comments please feel free to let us know.

Kind Regards

Thomas Andrews

Hi,

I tried the Scoopo web site recently and I asked for a refund.

The lag on their systems is evident. I tried to get a camera. After about six hours of regularly checking the system it just lagged out with 4 seconds left. It came back with a winner. Someone using the bidbutler who had just started bidding about ten minutes before he won.

I have nothing against playing the game but you can't calculate the chances of lag time.

It's completely ridiculous and unfair!!!!

Martial

If Swoopo is caught with shortchanging of bids, what would you do?? I need to find an able legal group (Law) to sue them for punitive and exemplary damages!!!

Any help.... Please send reply to thomastleepfa@hotmail.com

As head of the site Swoopo.com, I find it fair for me to take advantage of the people who try to bid on an item they are thinking they will win for a cheaper price than retail. It is sad for them but wonderful for me since I am making 3 times the amount of the cost per item being auctioned. While I rake in the money you can keep complaining when in fact you're just jeaous that I thought of this website before any of you. I emplore all of you to keep using my site thinking you're winning an item when in reality my bots are the only winners that bid. I think I'm going to buy another house from all your money.

Thank You,
Swoopo.com

CodingHorror has really been cracking into penny auction sites. What I find interesting though is how the mainstream news is approaching the subject. Earlier this summer there was an article about Swoopo in the San Jose Mercury News and this past Friday there was an report on the local ABC affiliate in Philadelphia.

I blogged about both stores, the local ABC story on GoBid.com is here:
http://penny-auction-insider.blogspot.com/2009/08/gobidcom-is-blessed-by-gods-of.html

They're Trying TO MAke A Buck
Who CAres?

Hi,

I tried the Gozila.co.uk penny auction site recently and I asked for a refund too.

I tried to get a PS3. And after 2 hours of bidding and lagging it shew the winner (not me).

I think it's too costly to play there...

Teddy

Well, i have to say that swoopo is a scamsite, they will never allow you to win even if you spend 100 pounds on items that worth 10 pounds.

My advice is to bid on gozila.co.uk penny auction.

Anyway ebay.com is the best, because you don't have to pay for bids.

In one of those wonderful ironies that using Ads by Google can give you, when I read this page the ad at the bottom of the blog post was for a penny auction site with ad copy "Just like [evil site mentioned in blog but deleted to avoid yet another mention] but cheaper Save up to 90% on Penny Auctions"

CodingHorror has really been cracking into penny auction sites. What I find interesting though is how the mainstream news is approaching the subject.

I just started looking into penny auctions today, and have read most of these comments. there may be moral issues with running a penny auction site, but that is a personal thing i guess. there are really only a couple problems.
first, there is no issue with lag, because it is not a factor in winning, but in keeping others from winning. IF I BID WITH 30 SECONDS LEFT AND NOBODY BIDS, BY THE TIME THE CLOCK GETS TO ZERO, I WON!! IF THEY DO BID DEFORE IT GETS TO ZERO, THEN THE COUNTER STARTS OVER (FROM 45 SECONDS OR 30 OR SOMETHING, FOR EXAMPLE)sniping doesn't work to win. if i want to win, i'd bid with t30 seconds left and let the counter start over at 45 or whatever and hope that when it gets to the end, everybody decides to let someone else snipe me to keep the auction alive. which brings me to bots
BOTS, or automatic bidding programs do two things, waste alot of money for people who use them, and let the companies running the show elongate the auction and make more money from an anonymous username. if they win, they can use another bot to keep the ball in the air until a real person comes along. it really is genius, because there really is no law against it. were i not burdened with morals, i would like to have thought of it first.

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Many Penny Auctions sites out there are failing. Whether it's poor planning, lack of tech skills to run an efficient site, or all the above, the rate in which old ones die and new ones start is staggering. It is a good idea to research these sites and see which ones have been up the longest. Also check for testimonials if they have any and also check the domain age.A good way to find out if the penny auctions are good are to contact the customer service and see how fast you get a reply. If it's within a few hours you're probably on your way to finding a great penny auction site!

Penny auctions are just another business: not really much worse than the stock exchange or the mortgage market. I dare to say they are indeed much better for many reasons. However, people who speak so loudly against them are just jealous because they did not come up with the same, simple and clever idea before the other guys did. That's all.

I don't find it as real gambling, it is a paid auction, or something like that, but there is no real gambling here, at least that is what I understand

It is gambling. I happen to love gambling though! You try being on the computer ALL DAY! You need a thrill, and online gambling is the best way to do it without going to jail, or getting a STD. I use http://muulu.com though. I don't feel like paying 75 cents per bid at swoopo when I can do it for 50 cents at muulu, the second bid package it's like 30 cents or somthing, There's my 2 cents.

Mikeck is lame. Going around the boards promoting his half-based POS website. Loves gambling and runs a gambling website. HAH!

It was too good to be true. getting somthing worth £300 for £20. You save £280-atmatic bid charges £380. you are £100 in the red

Hi,
I was just on the Swoopo.com website and selected the "Ended Auctions" from the dropdown in the top nav. From my research of ended auctions I'm not so sure I follow your point of view of this article. For example:

1) "Kenneth Cole Reaction Glisten to Me Tote" - Sold for $4.08. There were only 4 bids and the estimated savings was over $161. This sounds like a great freaking deal to me. Only 4 people placed a bid, so at the most there was only $2.40 tied up in the bids for this product. That's a great deal to me.

2) "Kingston DataTraveler 32 GB USB 2.0 Flash Drive" - Sold for $8.04. There was $10.80 in placed bids and it retails for close to $80. Another good deal.

I went through and checked more than 50 items randomly, scrolling through the pages of ended auctions. I saw 80% or more stellar deals for the winners and did not see, for the largest part, Swoopo.com making a killer profit as so many mentioned here.

Yeah, there were a few such as Macbook Pro laptops that garnished a lot of bids. Example of a recent ended auction on a Macbook Pro 13": Placed bids (1847): $1,108.20

But, come on people, why is this any different than the majority of states holding lotteries? I know people that should not be spending their cash on $40-$100 worth of lottery tickets each week but they do it anyway. The only difference is the method used -- one is over-the-counter at your local 7-11 while the other uses a series of ISPs, routers, and so on. So what if the instant you hit the "Bid" button if you don't automatically win. I don't see this being a perfect system but at least they state that there may be delays because of routers, ISP time delays, outages, etc. in their Terms of Service agreement.

Anyway, just my thoughts since it does in fact look like some people get great deals on their site and Swoopo.com doesn't necessarily walk away with loads of profit from each auction as some indicate here.

Hi,
I was just on the Swoopo.com website and selected the "Ended Auctions" from the dropdown in the top nav. From my research of ended auctions I'm not so sure I follow your point of view of this article. For example:

1) "Kenneth Cole Reaction Glisten to Me Tote" - Sold for $4.08. There were only 4 bids and the estimated savings was over $161. This sounds like a great freaking deal to me. Only 4 people placed a bid, so at the most there was only $2.40 tied up in the bids for this product. That's a great deal to me.

2) "Kingston DataTraveler 32 GB USB 2.0 Flash Drive" - Sold for $8.04. There was $10.80 in placed bids and it retails for close to $80. Another good deal.

I went through and checked more than 50 items randomly, scrolling through the pages of ended auctions. I saw 80% or more stellar deals for the winners and did not see, for the largest part, Swoopo.com making a killer profit as so many mentioned here.

Yeah, there were a few such as Macbook Pro laptops that garnished a lot of bids. Example of a recent ended auction on a Macbook Pro 13": Placed bids (1847): $1,108.20

But, come on people, why is this any different than the majority of states holding lotteries? I know people that should not be spending their cash on $40-$100 worth of lottery tickets each week but they do it anyway. The only difference is the method used -- one is over-the-counter at your local 7-11 while the other uses a series of ISPs, routers, and so on. So what if the instant you hit the "Bid" button if you don't automatically win. I don't see this being a perfect system but at least they state that there may be delays because of routers, ISP time delays, outages, etc. in their Terms of Service agreement.

Anyway, just my thoughts since it does in fact look like some people get great deals on their site and Swoopo.com doesn't necessarily walk away with loads of profit from each auction as some indicate here.

I don't find it as real gambling, it is a paid auction, or something like that, but there is no real gambling here, at least that is what I understand

So Jeff, how do you feel that you get to swoopo within 2 clicks from Stack Overflow?

The advert for Woot which has many large adverts for Swoopo.

@Brian

I did not agree that its gambling until I read your post. Its clear, if they can "sell" nearly $200 merchandise for such a "low amount", its obvious how they make their money. Its NOT an auction... in an auction a bidder wins an item with the highest bid, and buys it.

In this case, the winner wins the item by being the highest bid, but the price is subsidised by all the other bidders. Essentially its a lame gambling game where the pot is paid out in merchandise, and the house keeps the money.

There are some issues with regular auctions, and I agree with the end time observations. I always felt that ebay auctions should generally end within 24 hours of the last bid. Increasing cost should prevent never ending auctions anyway.

However, its the "pay to play" aspect that makes this gambling. I could see if there were a fee related to bidding... like a monthly account holder fee, or a small fee to open your bidding on an item. But pay per bid, is clearly a gamblers proposition.

Now I have no problem per se, I am a poker player myself. However, it should be made obvious what they are doing here. It also should be regulated since it would be retardedly easy to cheat, and not even offer a prize.

Afterall, it costs the server owner nothing to bid on his own item if he gets paid per bid.

Thanks for your information, i have read it, very good！

Thanks for your information, i have read it, very good！

Very cool! Congrats on the pairing.

Yea...I agree with the monthly cost but then people wont care what price the item is really as long as they get a discount and it wont provide such an incentive for people to join because others would just drive the price up.

Ive actually been using many of these sites to my advantage, yes its gambling but to a minimal degree if you go to the start up sites. Ive recently been using dibzees.com and theauctionsquirrel.com. I enjoy this and am not opposed to it as some others of you but just a little incite on some small companies where it is really easy to win!

Steve

You can not believe this deeply, so it looks very good, but many of this are deceptive, make money steadily with yourself is the best. Think these methods are not very good.

Now I have no problem per se, I am a poker player myself. However, it should be made obvious what they are doing here. It also should be regulated since it would be retardedly easy to cheat, and not even offer a prize.

Afterall, it costs the server owner nothing to bid on his own item if he gets paid per bid.

I agree with Bed it needs to be call what it is a gambling site. Those of us that like regular actions are dumb about these till we loss hard earned money. It is madding. If it had of said it was a game or stated the odds of winning I for won would have known what i was getting into and made an informed decision weather to "play " or not. oh and I got took on Bidcactus another "evil".

Thanks very much.I had read these.very useful.

One of Swoopo's investors recently contacted me via email, and I had to marvel at the size of the cojones you'd need to associate yourself with this kind of nastiness. Swoopo is evil beyond the likes of Saddam Hussein, The Balrog, OSB, Darth Vader, and Barbra Streisand -- combined.
well!

the penny auctions are what get me sick they make so much money on it its sick ....if swoopo could atleast put more items up at once so everybody could win somehow it would be cool, it would justify the penny auctions they make a killing on..it just needs to be more fair...the lag is a killer if u use the bid service it uses all your bids
in truth: when i recently found this site i needed a tv and won a $900 tv for $130 all together...but it was just beginners luck because i have spent a lot more trying to win again and had no luck..i never use bid buttler because i cant afford to throw all those bids away...but i have been tracking what they make and its turning my stomach...and im not too bad bid here and there but some people dump a ton of money and get nothing...if its too good to be true..you know...i think they lag the site a lot the clock stops at a few seconds and everyody panics and bids or nobody does and the auction is over with 7 seconds stuck on the clock...hey its a free country.....let it go i guess

Hey Jeff,
Interesting article. Swoopo does have many issues with their auction clocks. I have seen them off as much as several mins. A bidder has absolutely no chance to win by skill under that situation.
I understand, that if clocks are working reliably, if a bidder submits his bid at the very last sec. and no other bidders submit a bid then the clock will run out and the bidder wins the item. Much like auctionsniper on Ebay. The difference being that you have to do that manually on Swoopo. Their bid butler randomly selects the time at which it places your bid, which automatically wastes a lot of bids for you.
Manual bidding is the most efficient way to win an auction on Swoopo.
Swoopo's clocks have to be fully synchronized and reliable in order for my theory to work. I have been on Swoopo's website many times, but I have not seen their clocks working properly yet. I have not paid to bid yet. I am waiting for Swoopo to get their clocks corrected first. I have contacted Swoopo and told them so, and they have admitted to me that I am correct. They have told me that that they are working on it. When they do, I'll let you know how my bidding works out on Swoopo. Tommyboy84

Hey Jeff,
Interesting article. Swoopo does have many issues with their auction clocks. I have seen them off as much as several mins. A bidder has absolutely no chance to win by skill under that situation.
I understand, that if clocks are working reliably, if a bidder submits his bid at the very last sec. and no other bidders submit a bid then the clock will run out and the bidder wins the item. Much like auctionsniper on Ebay. The difference being that you have to do that manually on Swoopo. Their bid butler randomly selects the time at which it places your bid, which automatically wastes a lot of bids for you.
Manual bidding is the most efficient way to win an auction on Swoopo.
Swoopo's clocks have to be fully synchronized and reliable in order for my theory to work. I have been on Swoopo's website many times, but I have not seen their clocks working properly yet. I have not paid to bid yet. I am waiting for Swoopo to get their clocks corrected first. I have contacted Swoopo and told them so, and they have admitted to me that I am correct. They have told me that that they are working on it. When they do, I'll let you know how my bidding works out on Swoopo. Tommyboy84

Hi tommyboy84,

Unfortunately during this time we were experiencing some technical difficulties
with our site. These have now been resolved and all the bids you placed during
this time have been re-credited to your account. I have gone ahead and placed bids
into your account as a token of our technical issues. We apologize for any
inconvenience caused. Please allow up to 24 hours for these bids to be processed.

N.K. at Swoopo.com